Professional Documents
Culture Documents
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
SECOND DIVISION
ORTIGAS & CO. LTD., petitioner, vs. THE COURT OF APPEALS and
ISMAEL G. MATHAY III, respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse the decision of the Court of Appeals, dated March 25, 1996, in
CA-G.R. SP No. 39193, which nullified the writ of preliminary injunction issued by the Regional
Trial Court of Pasig City, Branch 261, in Civil Case No. 64931. It also assails the resolution of the
appellate court, dated August 13, 1996, denying petitioners motion for reconsideration.
The facts of this case, as culled from the records, are as follows:
On August 25, 1976, petitioner Ortigas & Company sold to Emilia Hermoso, a parcel of land
known as Lot 1, Block 21, Psd-66759, with an area of 1,508 square meters, located in Greenhills
Subdivision IV, San Juan, Metro Manila, and covered by Transfer Certificate of Title No. 0737. The
contract of sale provided that the lot:
1. (1) be used exclusivelyfor residential purposes only, and not more than one single-family
residential building will be constructed thereon,
xxx
6. The BUYER shall not erectany sign or billboard on the rooffor advertising purposes
xxx
11.
No single-family residential building shall be erecteduntil the building plans,
specificationhave been approved by the SELLER
xxx
14....restrictions shall run with the land and shall be construed as real covenants until
December 31, 2025 when they shall cease and terminate[1]
These and the other conditions were duly annotated on the certificate of title issued to Emilia.
In 1981, the Metropolitan Manila Commission (now Metropolitan Manila Development
Authority) enacted MMC Ordinance No. 81-01, also known as the Comprehensive Zoning Area for
the National Capital Region. The ordinance reclassified as a commercial area a portion of Ortigas
Avenue from Madison to Roosevelt Streets of Greenhills Subdivision where the lot is located.
On June 8, 1984, private respondent Ismael Mathay III leased the lot from Emilia Hermoso and
J.P. Hermoso Realty Corp.. The lease contract did not specify the purposes of the lease.
Thereupon, private respondent constructed a single story commercial building for Greenhills
sc.judiciary.gov.ph/jurisprudence/2000/dec2000/126102.htm
1/6
11/15/14
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
2/6
11/15/14
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
3/6
11/15/14
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
agricultural and Ordinance No. 81-01 did not specifically provide that it shall have retroactive
effect so as to discontinue all rights previously acquired over lands located within the zone which
are neither residential nor light industrial in nature,[15] and stated with respect to agricultural areas
covered that the zoning ordinance should be given prospective operation only.[16] The area in this
case involves not agricultural but urban residential land. Ordinance No. 81-01 retroactively
affected the operation of the zoning ordinance in Greenhills by reclassifying certain locations
therein as commercial.
Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533 (1979),
the contractual stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to the
ordinance. When that stretch of Ortigas Avenue from Roosevelt Street to Madison Street was
reclassified as a commercial zone by the Metropolitan Manila Commission in March 1981, the
restrictions in the contract of sale between Ortigas and Hermoso, limiting all construction on the
disputed lot to single-family residential buildings, were deemed extinguished by the retroactive
operation of the zoning ordinance and could no longer be enforced. While our legal system
upholds the sanctity of contract so that a contract is deemed law between the contracting parties,
[17] nonetheless, stipulations in a contract cannot contravene law, morals, good customs, public
order, or public policy.[18] Otherwise such stipulations would be deemed null and void.
Respondent court correctly found that the trial court committed in this case a grave abuse of
discretion amounting to want of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as
applicable to Civil Case No. 64931. In resolving matters in litigation, judges are not only dutybound to ascertain the facts and the applicable laws,[19] they are also bound by their oath of office
to apply the applicable law.[20]
As a secondary issue, petitioner contends that respondent Mathay III, as a mere lessee of the
lot in question, is a total stranger to the deed of sale and is thus barred from questioning the
conditions of said deed. Petitioner points out that the owners of the lot voluntarily agreed to the
restrictions on the use of the lot and do not question the validity of these restrictions. Petitioner
argues that Mathay III as a lessee is merely an agent of the owners, and could not override and rise
above the status of his principals. Petitioner submits that he could not have a higher interest than
those of the owners, the Hermosos, and thus had no locus standi to file CA-G.R. SP No. 39193 to
dissolve the injunctive writ issued by the RTC of Pasig City.
For his part, private respondent argues that as the lessee who built the commercial structure, it
is he and he alone who stands to be either benefited or injured by the results of the judgment in
Civil Case No. 64931. He avers he is the party with real interest in the subject matter of the action,
as it would be his business, not the Hermosos, which would suffer had not the respondent court
dissolved the writ of preliminary injunction.
A real party in interest is defined as the party who stands to be benefited or injured by the
judgment or the party entitled to the avails of the suit. Interest within the meaning of the rule
means material interest, an interest in issue and to be affected by the decree, as distinguished
from mere interest in the question involved, or a mere incidental interest.[21] By real interest is
meant a present substantial interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest.[22]
Tested by the foregoing definition, private respondent in this case is clearly a real party in
interest. It is not disputed that he is in possession of the lot pursuant to a valid lease. He is a
possessor in the concept of a holder of the thing under Article 525 of the Civil Code.[23] He was
impleaded as a defendant in the amended complaint in Civil Case No. 64931. Further, what
sc.judiciary.gov.ph/jurisprudence/2000/dec2000/126102.htm
4/6
11/15/14
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
petitioner seeks to enjoin is the building by respondent of a commercial structure on the lot.
Clearly, it is private respondents acts which are in issue, and his interest in said issue cannot be a
mere incidental interest. In its amended complaint, petitioner prayed for, among others, judgment
ordering the demolition of all improvements illegally built on the lot in question.[24] These show that
it is petitioner Mathay III, doing business as Greenhills Autohaus, Inc., and not only the Hermosos,
who will be adversely affected by the courts decree.
Petitioner also cites the rule that a stranger to a contract has no rights or obligations under it,
and thus has no standing to challenge its validity.[26] But in seeking to enforce the stipulations in
the deed of sale, petitioner impleaded private respondent as a defendant. Thus petitioner must
recognize that where a plaintiff has impleaded a party as a defendant, he cannot subsequently
question the latters standing in court.[27]
[25]
WHEREFORE, the instant petition is DENIED. The challenged decision of the Court of
Appeals dated March 25, 1996, as well as the assailed resolution of August 13, 1996, in CA-G.R.
SP No. 39193 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.
5/6
11/15/14
Ortigas & Co. Ltd. vs CA : 126102 : December 4, 2000 : J. Quisumbing : Second Division
citing Samahan ng mga Nangungupahan sa Azcarraga Textile Market, Inc., et al. vs. Court of Appeals, 165 SCRA
598 (1988).
[22] De Leon vs. Court of Appeals, 277 SCRA 478, 486-487 (1997); Barfel Development Corp. vs. Court of Appeals,
concept of owner, or in that of the holder of the thing or right to keep or enjoy it, the ownership pertaining to another
person.
[24] Rollo, p. 61.
[25] CIVIL CODE, Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation, or by
provision of law
[26] Ibaez vs. Hongkong and Shanghai Banking Corp., 22 Phil. 572, 584 (1912); Wolfson vs. Estate of Martinez, 20
sc.judiciary.gov.ph/jurisprudence/2000/dec2000/126102.htm
6/6